Tax Avoidance: “No Representation without Taxation”
The
recent scandals involving major multinationals like Starbucks and Amazon, and celebrities
like Carr and Paxman, have brought the attention and concern of the public to
the issue of tax avoidance and evasion. According
to a recent document published by War on Want, “as much as £20 trillion is now
held in secrecy jurisdictions, better known as tax havens. These allow big
companies and rich individuals to hide billions away from the prying eyes of
the tax collectors. If this money was subject to tax it could generate as much
as £180 billion a year in extra revenue”. Now our faith in the current tax
system is to be challenged even more, as we learn that the new head of HMRC,
replacing the disgraced Hartnett, famous for the so-called “sweetheart” multi-million
pound deals with tax avoiding companies like Vodaphone, is likely to be the
highly criticised head of UK Border Agency.
When CEOs of these “giant corporate
parasites” employ accounting firms like Deloitte and KPMG to lower their tax
payments, are they worried that the end result could well be the closure of
rival firms, and thousands losing their jobs? They must know that by paying
relatively next to nothing in tax, they are able to undercut the prices offered
elsewhere, and ultimately drive others out of business. Amazon, for example,
seems to be intent on clearing all highstreets of retail outlets, just as Tesco
and the major supermarkets want to see the end of corner-shops, butchers and
fruit and veg stores. Such “economic cleansing”, similar to some of London`s
councils foisting off their poor inhabitants to more northerly climes, cannot
be tolerated.
What
are people who deliberately avoid paying their fair share of tax actually
doing? Aren`t they telling the rest of us that the tax laws are for us, and
that if we want a better country, with hospitals, roads, schools and all the
trimmings of a modern 21st century society, we have to pay for it ,
because they will not? Of course, they want to enjoy the benefits, share the
occasional Olympic-type glory, but when it comes to paying their share, they`ve
presumably got better things to do with their money.
When rich individuals set up their own
companies, so that income tax can be avoided and the much lower corporate tax
be paid, or even better, when they can borrow from the company and pay no tax,
as they have not actually earned anything, they lower the amount of money going
into the Treasury`s coffers, and make future tax rises more likely, and cuts to
hospitals` and schools` budgets more likely. They clearly are not concerned
that such avoidance, losing the government billions every year as it does, will
inevitably cause job losses, leading to mortgage and rent problems, depression
and despair, and driving thousands more children into poverty.
The government of
course, well aware of the electorate`s disgust, has declared war on tax
avoiders; businesses that think they
can pay no tax in Britain need to "wake up and smell the coffee", David
Cameron famously said, whilst Osborne described all avoidance as “morally
repugnant”. However, this mere window dressing is a feeble attempt to hide the
truth, which is that the Tories have no intention of stopping what Margaret
Hodge, in her role as chair of the Public Accounts Committee, has described as
an “industry”. Let`s face it, if they invite representatives from KPMG to
advise Treasury committees dealing with corporation tax, they are not going to
close loopholes; if they introduce their initiatives, like the Patent Box
wheeze, which results in some businesses paying as little as 5% corporation
tax, they are never going to change the tax culture of the country.
So what can a government, or in our case, an
opposition party, intent on such change, do? How about some transparency for
starters? In this age of modern technology it is possible to make available
online the tax details of all individuals and corporations, as various
Scandinavian countries have done. This would put moral pressure of sorts on to
CEOs and individuals to change their ways, as they see their careers and
reputations reaching their rightful conclusions. Now that a General
Anti-Avoidance Rule appears to be heading for the statute book, one deterrent
becomes more obvious: a few prominent businessmen and “celebrities” in court,
with all the associated press coverage,
and some hefty fines, and even some prison sentences, could have a chastening
effect.
One other possibility remains: could there be a better time to
remind everyone what being a British citizen entails? Why should tax avoiders,
who do their utmost to avoid making their proper fiscal contributions, maintain
their right to participate in the democratic process? Why should sports people
be allowed to represent us if they contribute next to nothing towards the costs
of running their country? "No representation without taxation" sounds
a good slogan! Should MPs, judges, councillors and such like be allowed to
hold public office if they avoid paying their fair share? Should the taxpayers`
funded BBC employ "celebrities" who have formed their own companies
for one obvious purpose? Should known tax avoiders appear on the Honours list? Should
knighthoods and such like be returned by people since discovered to have been
fiddling their taxes?
So much
could be done, or pledged, by a political party intent on ending the current
culture of tax avoidance. They might make a few enemies on the way, but they
would be sure to win many more votes! However, don`t hold your breath. In
April last year, the Guardian reported
that Cameron promised the tax details of leading Coalition cabinet members
would be made public after the May elections. When he failed to do this,
Labour`s silence was deafening.
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